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ALBANY – School districts' pension costs will drop 16 percent next year, the state Teachers' Retirement System said.

The $110 billion pension fund, one of the largest in the nation, said last week that the districts' payments into the fund will drop for the third straight year after soaring following the 2009 recession.

"Rates have declined in each of the past three years primarily because system investment returns over the last several years have generally been strong," the system said in a statement.

The pension system said the contribution rate for school districts during the 2017-18 fiscal year, which starts July 1, will be 9.8 percent of payroll compared to 11.72 percent in the current fiscal year.

The high rates stressed school budgets, causing them to seek higher property taxes or cut services.

The 9.8 percent rate is the lowest in seven years.

"Considering that employee salaries make up the largest single portion of school district spending, even small decreases in the rate can add up to significant savings," the state School Boards Association said in a statement.

But the group pointed out that districts are still contending with a cap this year that will limit the growth in property taxes to 1.26 percent when they take their budgets to voters this May.

The cap, though, is higher than last year when it was a mere 0.12 percent.

Voters can override the cap with a 60 percent vote at the polls, but that has been difficult to achieve.

"With the property tax cap below 2 percent again this year, lower wealth school districts will likely still struggle to craft 2017-18 budgets that provide needed programs and services to students without a sufficient state aid increase," the school boards said.